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Pollution credit

How much is one company allowed to pollute? That might depend on how many credits it has. The practice of capping emissions levels (putting a limit on how much a company is permitted to pollute) and issuing credits to those companies who fall below the cap-credits that can then be sold to companies who are above it-represents an attempt to use the free market to regulate pollution and encourage better environmental practices. The Environmental Protection Agency (EPA) established one such system, specifically targeting acid-rain pollutants, as a part of the Clean Air Act of 1990. Just how effective pollution trading is, in the long run, is the subject of much debate; many environmentalists see it as a scheme that allows the worst polluters to continue their dirty ways without responsibility, as long as they have deep pockets. See also carbon market.

 

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